Review of the tax framework

The comprehensive review of the tax system in the plan shall identify distortions and areas where relevant tax legislation should be adjusted, in particular for corporate income tax, income tax and social security contributions as well as property taxation, so as to inform decisions for a gradual withdrawal of excessive tax incentives.

The review of the tax framework shall also aim at expanding green taxation, including as flanking measure for the sustainable transport and energy components.

In carrying out this reform, Romanian tax legislation shall be subject to a thorough analysis, with support of technical assistance provided by an independent institution, in particular in the areas of taxes and social contributions due on income earned by natural persons, corporate tax (including special schemes which may benefit from the exceptions), property taxes (which are local taxes) and green taxes.

This systematic analysis shall be followed by the implementation of the recommendations stemming from it to ensure that the tax system better promote sustainable economic growth.

Specifically regarding property taxes, the reform shall address the potential arbitrage between the two tax systems applicable respectively to natural and legal persons earning income from immovable property, and to automatically determine the taxable value of properties subject to local tax, discontinuing the practice of using a taxable base which is not linked to the market value.

The specific objectives of this reform are to: - improve the structure of tax revenues; - increase the tax revenue to GDP ratio by 0,5 percentage points by 2025 as compared to 2019; 15833/23 ADD 1 JGR/sr 236 ECOFIN 1A EN - eliminate distortions and loopholes in the tax system that allow taxpayers to minimise taxes (undermining the fairness of the system), in particular income tax and social contributions; - simplify tax rules to facilitate compliance and administration, and elimination of preferential exemptions and treatments; - achieve a more efficient tax system and a fairer distribution of the tax burden; - amend property taxation, including in particular by encouraging the free imposition of allowances by local authorities within centrally defined ranges and estimating the tax base as close as possible to the market value of the property.